Tuesday, March 28, 2006

On December 11, 1961, the government approved Law No. 80 “For the Definition of Exploitation Areas.” This curtailed the concession area of the oil companies by more than 99 per cent, namely to about 800 square miles undergoing exploitation, with provision made for a reserve, also of 800 square miles.

The oil companies protested against the new legislation, but did not dispute its validity. They demanded arbitration. However, they handed over to the government their technical data on the unexploited areas, in accordance with a provision of the law. Meanwhile, British and United States representatives interceded for the companies and asked for a renewal of negotiations. The Iraqi government rejected their proposals, which were condemned as “interference” from outside. The request for arbitration was ignored.

Nevertheless the law had no further practical consequences. Having come perilously close to brink, the two sides reined in. Qassim had never contemplated surrendering the annual ID 100 million in royalties for oil he knew he could not sell outside the West, and on which the government of the country depended. Nor did the oil companies intend to stop a profitable business while Qassim’s vagaries – unpleasant, costly and possibly auguring ill for the future – entailed no crippling damage for the present. The output of oil, at any rate, never suffered.

A National Oil company was envisaged to exploit the areas over which foreign companies’ concessions had been cancelled. The draft of enabling law was published in September 1962. It was due for promulgation early in February 1963, but Qassim’s regime met its end first.

The contest with the “imperialistic” oil companies received the enthusiastic support of the Iraqi newspapers at every phase. Their constant baiting may have encouraged Qassim, or may equally have been an embarrassment, impeding his freedom to maneuver.

There is no doubt that his handling of the oil negotiations and their aftermath did Qassim great damage with the West. The original British view that he was a match for the communists, and in the circumstances the least undesirable of possible regimes for Baghdad, had slowly been gaining ground in the United States. Now, as a communist takeover was no longer an imminent danger, Qassim had shown himself viciously ill disposed to the West. He had become expendable on positive as on negative grounds.